The big decline in markets over the last few days motivated some companies to announce very large buybacks not just in absolute dollar terms but also in relation to their market caps. We saw a total of 21 companies announce buybacks including a $2 billion buyback by Thomson Reuters (TRI) representing around 4.5% of its market cap at announcement. This buyback is perplexing because TRI is not cheap, revenue growth has slowed into the single digits and the company has $3.3 billion of net debt on the balance sheet.
Cash is however not an issue for the top 5 buybacks in our list below, two of which happen to be net-nets (QD and NISN). Qudian (QD) is a Chinese company that recently received a delisting notice from NYSE because its stock dipped below $1 for 30 consecutive days. This buyback announcement helped the stock jump up more than 37% yesterday and it is up another 11% today.
The more interesting buyback announcement was from Signet Jewelers (SIG), the owner of brands like Kay Jewelers, Zales, Jared among many others. Signet is a company I have held in my personal portfolio for several years and have been pleased with the turnaround CEO Gina Drosos has executed at the company since being appointed to the role in 2017. The stock trades at a forward P/E of 6, a forward EV/EBITDA of 3.75 and has a strong balance sheet. With the implosion of crypto assets and the softening in real estate, I would not be surprised if growth slows down at a company like Signet, which caters to discretionary purchases.
Welcome to edition 11 of Buyback Wednesdays, a weekly series that tracks the top stock buyback announcements during the prior week. The companies in the list below are the ones that announced the largest buybacks as a percentage of their market caps. They are not the largest buybacks in absolute dollar terms. A word of caution. Some of these companies could be low-volume small-cap stocks with a market cap below $2 billion.
Top 5 Stock Buyback Announcements
1. Qudian Inc. (QD): $0.99
On June 14, 2022, the Board of Directors of this technology platform, approved a new share repurchase program authorizing the company to repurchase up to $200 million of its class A common stock, which exceeded its market cap at announcement.
| Market Cap: $204.66M | Avg. Daily Volume (30 days): 804,335 | Revenue (TTM): 249.68M |
| Net Income Margin (TTM): 37.13% | ROE (TTM): 4.8% | Net Cash: $1.1B |
| P/E: 2.34 | Forward P/E: 4.94 | EV/EBIDTA (TTM): -6.44 |
2. Algoma Steel Group Inc. (ASTL): $7.9
On June 14, 2022, the Board of Directors of this steel company, announced an intention to start a new share repurchase program authorizing the company to repurchase up to $400 million of its class A common stock, equal to nearly 34% of its market cap at announcement.
| Market Cap: $1.18B | Avg. Daily Volume (30 days): 800,957 | Revenue (TTM): N/A |
| Net Income Margin (TTM): N/A | ROE (TTM): N/A | Net Cash/Debt : N/A |
| P/E: 1.85 | Forward P/E: 3.49 | EV/EBIDTA (TTM): 0.76 |
3. Nisun International Enterprise Development Group Co., Ltd (NISN): $0.6460
On June 10, 2022, the Board of Directors of this investment holding company, approved a new share repurchase program authorizing the company to repurchase up to $8 million of its class A common stock equal to nearly 27% of its market cap at announcement.
| Market Cap: $31.05M | Avg. Daily Volume (30 days): 2,072,478 | Revenue (TTM): $160.20M |
| Net Income Margin (TTM): 18.96% | ROE (TTM): 23.06% | Net Cash: $116M |
| P/E: 0.84 | Forward P/E: N/A | EV/EBIDTA (TTM): -2.22 |
4. Signet Jewelers Limited (SIG): $61.07
On June 09, 2022, the Board of Directors of this world’s largest retailer of diamond jewelry, approved an additional share repurchase program authorizing the company to repurchase up to $500 million of its class A common stock equal to nearly 15.6% of its market cap at announcement.
| Market Cap: $3.08B | Avg. Daily Volume (30 days): 1,532,193 | Revenue (TTM): $7.98B |
| Net Income Margin (TTM): 6.87% | ROE (TTM): 28.24% | Net Cash: $200M |
| P/E: 4.48 | Forward P/E: 4.82 | EV/EBIDTA (TTM): 4.45 |
5. Despegar.com, Corp. (DESP): $6.94
On June 13, 2022, the Board of Directors of this mobile-based social and entertainment services provider, approved a new share repurchase program authorizing the company to repurchase up to $40 million of its class A common stock equal to nearly 8.8% of its market cap at announcement.
| Market Cap: $519.97M | Avg. Daily Volume (30 days): 255,759 | Revenue (TTM): $383.41M |
| Net Income Margin (TTM): -25.6% | ROE (TTM): -72.73% | Net Cash: $332M |
| P/E: N/A | Forward P/E: 44.44 | EV/EBIDTA (TTM): -15.85 |
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